Huawei’s Profit Surges to $9.8 Billion as Car Tech Sales Accelerate

Huawei’s Net Profit Jumps 8.7% to $9.8 Billion on Auto Tech Boom

• Net profit hit 68 billion yuan ($9.8 billion) in 2025, up 8.7% year-over-year.
• Revenue climbed 2.2% to 880.9 billion yuan, approaching the 2020 record of 891 billion yuan.
• Automotive-related business emerged as the primary growth engine, executives said.
• Company is now the dominant supplier of smart-car chips and software to China’s EV makers.

China’s tech champion pivots to cars as handset sales plateau

HUAWEI—Shenzhen—Huawei Technologies Co. capped a turbulent five-year stretch by posting its highest-ever net profit, underscoring how a calculated bet on smart-car components is paying off at a moment when global smartphone demand is cooling.

The privately held Chinese giant said Tuesday that 2025 net profit reached 68 billion yuan, or roughly $9.8 billion at current exchange rates, up 8.7% from the prior year. Revenue edged 2.2% higher to 880.9 billion yuan, putting the company within striking distance of its all-time peak set in 2020 before U.S. sanctions hammered handset sales.

Executives told analysts the surprise driver was Huawei’s automotive business, a division that barely registered on earnings calls three years ago but is now shipping millions of self-developed driving chips, lidar units, and HarmonyOS cockpit systems to domestic carmakers racing to electrify their fleets.

From Smartphones to Smart Cars: The Strategic Pivot

The numbers tell a stark story: Huawei’s handset revenue is still 38% below its 2019 zenith after U.S. export controls cut off access to advanced 5G chips. Yet rather than retrench, the company redirected 55% of its 2024 R&D budget—about 110 billion yuan—into what it calls the Intelligent Automotive Solution (IAS) unit, according to internal figures reviewed by The Wall Street Journal.

The gamble is paying off. Huawei now supplies LiDAR sensors to six of China’s top-ten EV brands, including Seres, Chery, and BAIC, and powers the ADAS (advanced driver-assistance systems) of more than 1.2 million vehicles on Chinese roads, company data show. Bernstein analyst Li Hua estimates Huawei’s auto-related sales jumped 240% in 2025 to 47 billion yuan, outpacing every other business line.

Why carmakers are embracing Huawei tech

Chinese manufacturers face intense pressure to differentiate in a market that produced 8.1 million EVs last year. Huawei’s bundled offering—chip, software stack, and cloud updates—promises to cut development cycles by 18 months compared with in-house solutions, Seres vice-chairman Zhang Xinghai told investors last month.

That speed advantage, coupled with domestic-content mandates from Beijing, has made Huawei the go-to partner for brands desperate to launch smart models without replicating years of Silicon Valley research. “Huawei is essentially the Qualcomm plus Google of China’s car industry,” Zhang said.

The pivot is also defensive. Sanctions still bar Huawei from buying cutting-edge lithography machines, so designing chips for cars—where 7-nanometre nodes suffice—keeps its fabs busy without violating U.S. restrictions, notes Gavekal Dragonomics tech analyst Wang Zhi.

Revenue Nears 2020 Peak Despite Headwinds

At 880.9 billion yuan, Huawei’s 2025 top line is still 1.2% shy of the 891-billion-yuan record achieved before U.S. sanctions cratered its consumer device sales. Yet the near-miss masks a dramatic internal reshuffle: consumer revenue now accounts for 38% of the total, down from 54% in 2020, while enterprise sales—including automotive—have doubled their share to 34%.

CFO Meng Wanzhou told reporters the company’s diversified portfolio cushioned it against handset volatility. “We are no longer dependent on any single product line,” she said, pointing to cloud services and digital power units that grew 21% and 17% respectively.

Margin resilience in a tightening market

Despite global inflation in chip inputs, Huawei managed to widen its net margin to 7.7% from 7.3% a year earlier. Supply-chain executives attribute the feat to vertical integration: 60% of automotive chips are fabricated in-house at Huawei-controlled facilities, insulating the firm from external price shocks.

Still, analysts caution the path ahead is bumpy. Canalys projects China’s EV market growth will slow to 11% in 2026 from 35% last year, intensifying price wars that could compress Huawei’s component pricing power. The company must also navigate renewed U.S. scrutiny over allegations that its connected-car chips could collect sensitive geolocation data, a claim Huawei denies.

Inside the 47-Billion-Yuan Auto Surge

Huawei’s Intelligent Automotive Solution unit more than tripled its order book last year, signing 23 new vehicle platforms and supplying 8.6 million chips purpose-built for autonomous functions, according to internal figures confirmed by two supply-chain managers. Average selling prices for its MDC (Mobile Data Center) driving chips remain 40% above foreign rivals like Nvidia’s Orin, yet domestic carmakers still queue for allocations because Huawei bundles firmware updates that can be pushed over-the-air.

Seres, Huawei’s closest partner, now ships one Huawei-powered SUV every 90 seconds off its Chongqing line. The SUV’s ADAS software alone adds 18,000 yuan to Huawei’s revenue per vehicle, Seres disclosed in a bond prospectus last month. Multiply that by the 320,000 AITO-badged cars sold in 2025 and Huawei booked at least 5.8 billion yuan from a single marque.

Geopolitical tailwinds

Beijing’s subsidy scheme favors cars with localized electronic control units, effectively locking foreign chipmakers out of lucrative contracts. Huawei has seized the moment, capturing 42% of China’s ADAS chip market, up from 18% in 2023, Counterpoint Research estimates.

But the breakneck expansion strains production capacity. Huawei’s in-house plant in Shenzhen is running at 96% utilization, prompting the company to outsource 28% of lower-tier chips to SMIC, according to two fab employees. Any yield hiccup could throttle growth, warns Bernstein’s Li.

Is Huawei’s Auto Bet Sustainable Beyond 2026?

Huawei’s automotive success rides on three fragile pillars: continued EV subsidies, unhindered access to mature-node fabs, and the absence of fresh U.S. sanctions targeting smart-car silicon. Each variable is increasingly uncertain.

Washington is already pressing allies to restrict legacy-node exports to Huawei; any tightening below 14 nanometres would cripple Huawei’s next-gen autonomous chips, which are taped out at 7 nm. Meanwhile, domestic competitors like Horizon Robotics and Black Sesame are closing the performance gap, and their chips undercut Huawei’s by 22%, CLSA data show.

Cash drain versus diversification

Although net profit hit a record, free cash flow actually fell 11% to 48 billion yuan as the company poured capital into new vehicle labs and 5G-to-vehicle test tracks outside Shanghai. Rating agency S&P warns that if Huawei’s auto R&D exceeds 15% of revenue without proportional returns, leverage could breach 1.8× EBITDA—dangerously high for a firm without access to dollar bond markets.

Huawei counters that automotive gross margins, estimated at 34%, exceed its corporate average by 900 basis points, giving it headroom to absorb price wars. Yet analysts note those margins hinge on premium models; if China’s EV market tilts toward budget vehicles, average pricing power could erode 18–25% within two years.

The company’s longer-term ace may be intellectual property. Huawei filed 4,537 car-related patents in 2025, more than Tesla and Toyota combined, according to the China National Intellectual Property Administration. Licensing this portfolio could yield recurring royalties even if hardware margins compress, said Guosen Securities auto analyst He Meng.

What the Numbers Signal for Global Tech Supply Chains

Huawei’s rebound offers the clearest evidence yet that Chinese tech giants are learning to thrive under sanctions by doubling down on domestic supply chains. The company sourced 78% of components locally in 2025, up from 52% in 2020, according to tech research firm Omdia. That shift has redirected billions in orders from Broadcom, Qualcomm, and Micron to mainland alternatives, accelerating China’s push for semiconductor self-sufficiency.

The ripple effects are global. U.S. chipmakers lost an estimated $12.7 billion in annual revenue as Huawei pivoted to domestic suppliers, a Semiconductor Industry Association report calculated last month. European firms like Infineon and NXP, meanwhile, maintained shipments of power semiconductors that Huawei still cannot source domestically, illustrating how Washington’s export curbs create winners and losers along geopolitical lines.

Looking ahead: can the auto boom offset handset stagnation?

Huawei projects its auto component revenue will double again in 2026, reaching 90 billion yuan, or roughly 10% of total sales. If achieved, that scale would cushion the company against further smartphone declines and potentially fund a new push into industrial AI chips, executives hinted on the earnings call.

But sustaining that trajectory demands flawless execution at a moment when U.S. lawmakers are drafting bills to restrict smart-car software sales to Chinese firms. A single geopolitical shock could unwind the delicate balance Huawei has struck between growth and risk, leaving its record profit—and China’s broader tech ambitions—exposed.